Sales Tax Obligations of Sellers in Arkansas

April 13, 2006

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The following items should help you with the most frequently asked questions concerning sellers and sales and use tax issues.

Procedure for accepting resale certificates. No particular form need be used by sellers receiving statements of exemption from their customers. The seller merely has the customer certify on the invoice or a separate certification letter that the transactions are exempt and why. The certification letter should include:

the name and address of the purchaser
the retail permit number of the permit issued to the purchaser
a statement that the purchaser is engaged in the business of reselling what was purchased
a statement that the articles purchased are purchased for resale
the signature of the purchaser

Procedure for accepting blanket certificates. Sellers who repeatedly sell the same type of property to the same purchaser may accept a blanket certificate that covers more than one transaction with that purchaser. A blanket certificate will relieve the burden of executing a separate certificate for each individual tax-exempt purchase as long as there is no significant change in the operations. There is no prescribed form for a blanket certificate but it should include the same information discussed above for a resale certificate.

Sales and use tax liability for out-of-state mail order and catalogue retailers. Arkansas no longer has a statute that specifically taxes out-of-state mail order and catalogue sellers. You will be responsible for paying sales tax only if you have physical presence within Arkansas. To determine if you have physical presence, ask yourself the following:

Do I have retail facilities, a warehouse or any office space in Arkansas? Maintaining retail or warehouse facilities will give you physical presence. Also, having an office for employees, even for business activities unrelated to mail order sales, will give you physical presence.
Do my employees or I enter Arkansas for purposes of taking and transmitting orders from Arkansas? If your employee or independent contractor goes into Arkansas to take or transmit orders your business may have physical presence in Arkansas. However, contracting with a common carrier to deliver mail order goods does not constitute physical presence.
Do my delivery vehicles frequently enter Arkansas for purposes of delivering property? Frequent deliveries in Arkansas by your trucks will give you physical presence in Arkansas.

Absorbing the tax — using a "no sales tax" advertising strategy to drum up business. The sales tax is the responsibility of the seller. It appears that retailers are able to advertise or state to the public that the tax will not be added to the selling price.

Claiming refund for excess tax payments. A refund is claimed by filing an amended return or a verified claim for refund. The claim should include the name of the taxpayer, the time when, and the period for which, the tax was paid, the amount of tax claimed to have been erroneously overpaid, and the grounds upon which a refund is claimed.